One of the largest construction insurers in the U.S. is taking a hit to its bottom line, some of it due to unspecified potential construction-related claims and payouts.

Zurich Insurance Group AG is setting aside an additional $306 million in reserves to cover auto and construction liabilities in the U.S.

Adding to the turmoil, Chief Executive Officer Martin Senn stepped down on December 1st, with Chairman Tom de Swaan taking over the top spot as interim chief executive.

The bad news on the construction front came at a bad time for the Swiss insurance giant, which has been slammed with $275 million in losses from the Tianjin port explosion disaster in China. In September, the company abandoned a large planned acquisition of British insurer RSA. 

Zurich saw third quarter profit plunge 79%, to $207 million, down from $966 million during the same period last year.

Zurich American Insurance Co., its Illinois-based subsidiary, is a major player in construction insurance. It has not disclosed what is behind the rise in construction liabilities. Nor is it possible to pin down how much of the possible liabilities are related to one big disputed claim Zurich and other insurers face.

The claim involves Bertha, the huge tunnel-boring machine that got stuck two years ago under downtown Seattle and has since been repaired but hasn’t resumed work. Zurich American is one of a group of insurers seeking to deny a claim that could cost tens of millions of dollars in repairs to the machine.

Claims-Related Lawsuits

Seattle Tunnel Partners, the firm overseeing the stalled tunnel project, has filed a breach-of-contract suit to try to compel the insurers to settle a claim for Bertha’s repairs under a builders’ risk insurance policy. The machine sustained damage when it struck “an eight-inch abandoned well casing,” STP contends in a lawsuit filed earlier this year in King County Superior Court in Washington.

Zurich American and the other insurers, in a separate lawsuit filed in state court in New York City, are claiming design defects are to blame and therefore declining to pay the claim. The insurers hired Munchen, Germany-based Maidl Tunnel Consultants to examine the damage to Bertha and the consultant argued that the tunnel-boring machine was “under dimensioned” for the task, with the “operational loads … beyond the design limits of the equipment.”

The total repair bill for Bertha is now up to $143 million, with the insurance policy that is currently in dispute worth $85 million.